Monster Beverage Corporation Waives Financing Condition for Modified Dutch Auction Tender Offer to Purchase Up to $3.0 Billion of Its Outstanding Common Stock
Monster Beverage (NASDAQ: MNST) has announced an amendment to its modified 'Dutch auction' tender offer, aiming to buy back up to $3.0 billion of its outstanding common stock at prices between $53.00 and $60.00 per share. The offer commenced on May 8, 2024, and will expire on June 5, 2024. On May 22, Monster entered into a new $750 million three-year term loan and a $750 million five-year revolving credit facility. The tender offer, initially dependent on securing at least $1 billion in financing, will now use $750 million in debt and $2.25 billion in cash on hand, waiving the original financing condition. The co-CEOs and their related entities intend to tender significant shares, subject to market conditions.
- Monster Beverage is conducting a significant $3.0 billion stock buyback, which could positively impact MNST share prices by reducing the number of outstanding shares.
- The buyback price range of $53.00 to $60.00 per share may provide a premium to current shareholders.
- Monster has secured $750 million in a new term loan and $750 million in a revolving credit facility, ensuring financial flexibility.
- The use of $2.25 billion in cash on hand to fund the tender offer indicates strong liquidity.
- The waiver of the financing condition implies that Monster was unable to secure the full $1 billion in debt financing initially required.
- Significant insider participation in the tender offer could be seen as a lack of growth opportunities, prompting the co-CEOs to liquidate shares.
Insights
Monster Beverage Corporation's announcement of waiving the financing condition for its $3.0 billion modified Dutch auction tender offer carries significant implications for investors. A Dutch auction tender offer allows shareholders to indicate how many shares they are willing to sell at a range of prices set by the company. This typically signals the company's confidence in its current valuation. Monster's decision to use $2.25 billion in cash on hand and a $750 million credit agreement to fund the offer shows strong liquidity and a robust balance sheet.
For shareholders, this tender offer could lead to an immediate boost in stock price, as the company is buying back shares within the $53.00 to $60.00 price range, potentially reducing the overall supply of shares in the market. This move is often seen as a strategy to return value to shareholders and can be interpreted as a vote of confidence by the management in the company's future prospects.
However, it's important to look at the implications of using a significant portion of cash reserves. While it signals financial strength now, it also reduces the cash on hand that could have been used for other strategic investments or as a buffer during economic downturns. Investors should weigh the immediate potential appreciation in their stock against the possible long-term limitations on the company’s financial flexibility.
From a market perspective, Monster Beverage's tender offer and the participation of Sterling Trustees and the co-CEOs provide a strong bullish signal. The participation of key insiders indicates their confidence in the company's valuation and future growth prospects. This insider activity often leads to positive sentiment among investors, potentially driving up the share price in the short term.
Moreover, the use of a modified Dutch auction can be seen as a strategic move to attract a broader range of shareholders willing to sell their shares within the specified price range. This method can offer a more balanced approach compared to a fixed-price tender offer, as it allows market forces to determine the final purchase price within the given range.
However, it's essential to consider the broader energy drinks market dynamics. Monster Beverage operates in a highly competitive industry with companies like Red Bull and PepsiCo's Rockstar vying for market share. While the buyback signals confidence, market position and innovation in product offerings remain important for long-term growth. Investors should remain mindful of these competitive pressures when assessing the impact of the tender offer.
CORONA, Calif., May 29, 2024 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (“Monster”) (NASDAQ: MNST) today announced that it is amending its previously announced modified “Dutch auction” tender offer to purchase shares of its common stock for cash at a price per share of not less than
On May 22, 2024, Monster and certain of its subsidiaries entered into a new credit agreement providing for a new
Sterling Trustees LLC, which controls trusts and entities for the benefit of certain family members of Monster’s co-CEOs Messrs. Sacks and Schlosberg, has advised Monster that it currently intends to tender up to an aggregate of 10,000,000 shares on behalf of such trusts and entities, as purchase price tenders, subject to market conditions. Hilton Schlosberg, one of Monster’s co-CEOs and a member of the Board of Directors, has advised Monster that he currently intends to tender up to 350,000 shares that he beneficially owns, as purchase price tenders, subject to market conditions. Rodney Sacks, Monster’s other co-CEO and a member of the Board of Directors, has advised Monster that he currently intends to tender up to 610,000 shares that he beneficially owns, as purchase price tenders, subject to market conditions.
The tender offer is only being made pursuant to the terms and subject to the conditions described in the Offer to Purchase, dated May 8, 2024 (the “Offer to Purchase”), the related Letter of Transmittal, dated May 8, 2024 (the “Letter of Transmittal”), and certain other materials related thereto, as each may be amended and supplemented from time to time.
Evercore Group L.L.C. and J.P. Morgan Securities LLC are acting as dealer managers for the tender offer. D.F. King & Co., Inc. is serving as the information agent, and Equiniti Trust Company, LLC is acting as the depositary. The Offer to Purchase, the related Letter of Transmittal and the other tender offer materials were filed with the SEC, and shareholders may obtain free copies of these documents from the SEC’s website at www.sec.gov. Shareholders should read these materials carefully because they contain important information, including the terms and conditions of the tender offer. Requests for documents may also be directed to D.F. King & Co., Inc. at (888) 605-1958 or MNST@dfking.com. Questions regarding the tender offer may be directed to Evercore Group L.L.C. at (888) 474-0200 or J.P. Morgan Securities LLC at (877) 371-5947.
Although Monster has authorized the tender offer, none of the Board of Directors, Monster, the dealer managers, the information agent or the depositary or any of their affiliates has made, and they are not making, any recommendation to shareholders as to whether shareholders should tender or refrain from tendering their shares or as to the price or prices at which shareholders may choose to tender their shares. Monster has not authorized any person to make any such recommendation. Shareholders must make their own decision as to whether to tender their shares and, if so, how many shares to tender and the price or prices at which they will tender the shares. In doing so, shareholders should read carefully the information in, or incorporated by reference in, the Offer to Purchase and in the Letter of Transmittal, including the purpose and effects of the tender offer. Shareholders are urged to discuss their decision with their own tax advisors, financial advisors and/or brokers.
This press release is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security. No offer, solicitation or sale will be made in any jurisdiction in which such an offer, solicitation or sale would be unlawful, save as in compliance with the requirements of Rule 13e-4(f)(8) promulgated under the Securities Exchange Act of 1934, as amended.
Monster Beverage Corporation
Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. Monster’s subsidiaries develop and market energy drinks, including Monster Energy® drinks, Monster Energy Ultra® energy drinks, Juice Monster® Energy + Juice energy drinks, Java Monster® non-carbonated coffee + energy drinks, Rehab® Monster® non-carbonated energy drinks, Monster Energy® Nitro energy drinks, Reign® Total Body Fuel high performance energy drinks, Reign Inferno® thermogenic fuel high performance energy drinks, Reign Storm® total wellness energy drinks, NOS® energy drinks, Full Throttle® energy drinks, Bang Energy® drinks, BPM® energy drinks, BU® energy drinks, Burn® energy drinks, Gladiator® energy drinks, Live+® energy drinks, Mother® energy drinks, Nalu® energy drinks, Play® and Power Play® (stylized) energy drinks, Relentless® energy drinks, Samurai® energy drinks, Ultra Energy® drinks, Predator® energy drinks and Fury® energy drinks. Monster’s subsidiaries also develop and market still and sparkling waters under the Monster Tour Water® brand name. Monster’s subsidiaries also develop and market craft beers, hard seltzers and flavored malt beverages under a number of brands, including Jai Alai® IPA, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin® hard seltzers, The Beast Unleashed® and Nasty Beast™ Hard Tea. For more information visit www.monsterbevcorp.com.
Caution Concerning Forward-Looking Statements
Certain statements made in this announcement may constitute “forward-looking statements.” Monster cautions that these statements are based on management’s current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of Monster, that could cause actual results and events to differ materially from the statements made herein. For a more detailed discussion of the risks that could affect Monster’s operating results, see Monster’s reports filed with the Securities and Exchange Commission, including Monster’s annual report on Form 10-K for the year ended December 31, 2023 and subsequently filed reports. Monster’s actual results could differ materially from those contained in the forward-looking statements, including with respect to the tender offer.
CONTACTS:
Rodney C. Sacks
Chairman and Co-Chief Executive Officer
(951) 739-6200
Hilton H. Schlosberg
Vice Chairman and Co-Chief Executive Officer
(951) 739-6200
Roger S. Pondel / Judy Lin
PondelWilkinson Inc.
(310) 279-5980
FAQ
What is the purpose of Monster Beverage's $3.0 billion stock buyback?
When will Monster Beverage's tender offer expire?
How is Monster Beverage funding its stock buyback?
What was the original financing condition for Monster Beverage's tender offer?
How many shares do the co-CEOs of Monster Beverage intend to tender?
